Minister of Finance rules out tariff protection for Chandra Asri
Minister of Finance rules out tariff protection for Chandra Asri
JAKARTA (JP): Minister of Finance Mar'ie Muhammad yesterday
ruled out the possibility of issuing tariff protection for newly
built industrial facilities, including the olefin project of PT
Chandra Asri Petrochemical Center.
"All new industrial plants should comply with the existing
tariff policy, without exception," the minister told newsmen in
response to Chandra Asri's request on Wednesday for tariff
protection.
Mar'ie said that maintaining the existing tariff formula is in
line with the government's policy to gradually reduce import
tariffs.
"The decisions were made by the President. I only announced
them," the minister said, referring to the July deregulation
package, which included the reduction of tariffs on a number of
products.
"The existing tariff policy will be consistently implemented.
It will not be changed," he reiterated his earlier statement
about the possibility of raising import tariffs of certain
petrochemical products in favor of Chandra Asri.
Peter Gontha, a director of Chandra Asri, said Wednesday the
company needs the government's protection against imported
products.
At a hearing with Commission VI of the House of
Representatives, Peter asked the government to impose a duty of
between 35 percent and 40 percent on imports of ethylene and
propylene, two of the olefin products to be manufactured by
Chandra Asri starting next year.
He said the protectionist measure is essential to enable the
company to compete with imported goods.
Chandra Asri, which is currently building a US$1.7 billion
petrochemical plant in Cilegon, West Java, is controlled by the
Bimantara and Barito groups.
The olefin plant, the first in the country, will manufacture
ethylene and propylene, the intermediate petrochemicals used to
make polyethylene and polypropylene, the raw materials for the
production of plastics, tires, synthetic fiber, pesticides,
synthetic rubber, house wares and detergent.
Difference
State Minister of Investment Sanyoto Sastrowardoyo, expressed
a different opinion from Mar'ie's over the need of granting
special treatment to Chandra Asri.
"If we consider the prospect of the company, we have to
support it," he told newsmen yesterday, commenting on Chandra
Asri's protection request.
Sanyoto said Indonesia has an abundance of raw materials for
the production of olefin products but it cannot process them due
to the absence of the olefin plant.
"Most of the raw materials are exported and then we import
them again in the form of semi-finished products," he said. "Are
you willing to be like this all the time."
"Moreover, the company is committed to building its second
plant with an additional investment of around US$1.4 billion," he
said of the significance of the company's technological strength.
He agreed with Peter's view that imposing import tariffs on
ethylene and propylene products would not hurt but instead
encourage the downstream industry.
Minister of Industry Tunky Ariwibowo, when asked by reporters
after meeting with President Soeharto yesterday, said that his
ministry usually tells investors who plan to set up new
industrial plants to follow the government's policy of gradually
reducing import tariffs.
"But I cannot answer you now on whether we will protect
Chandra Asri's operation because we will have to look at its cost
structure before making any decision," he said.(hen/rid)